Take Five: Dodge the Summer Seeds


LONDON, Aug. 9 (Reuters) – Below are five events and themes that are likely to dominate global financial markets this week.

1 / INFLATION PALPITATIONS

US consumer price data, released on Wednesday, will provide answers to one of the most pressing questions in global markets right now: How far is the current spike in US inflation? sustainable?

Last month’s 0.9% jump was the biggest gain since June 2008. May was also quite dynamic at 0.6% and economists polled by Reuters believe July’s figure won’t be far behind, at 0.5%.

The Federal Reserve hawks watch these numbers, well, like hawks. After strong payroll data on Friday, another hot figure will strengthen their case for the central bank stimulus sooner rather than later. This could cause summer squalls in record stock markets and searing bond markets. .

2 / HOLI-HÉBÉ

In March, Morgan Stanley predicted another wasted summer for tourism, surprising some given the vaccine optimism at the time. Now, in August, when beaches and towns are normally teeming with vacationers, their call seems to be ringing.

Spain received 75% fewer tourists last month than in June 2019. The Greek islands, billed as “COVID-free”, are again subject to travel restrictions and are suffering from forest fires. Phuket in Thailand only has 1% of the visitors it had before the pandemic. Turkey’s tourism revenue in the second quarter was $ 3 billion, up from $ 8 billion in the second quarter of 2019, while Kenya received just 300,000 visitors in the first half, up from 2 million in 2019.

Given that tourism contributes directly to 6% of European GDP and almost 8% of employment, it is not surprising that the expectations index of euro area service companies has fallen to its lowest level in three months and that the share of trips to Europe has lost 13% since April. The Thai baht has fallen to its lowest since 2018 – enough to make you want a vacation. * The baht leads losses among Asian currencies due to virus issues * Foreign tourism to Spain increases from last year in June, 75% below 2019

3 / WIND WIND IN ASIA

Chinese data for the weekend and the next few days shows how much Beijing’s regulatory crackdown, recent flooding in Henan province, and the new wave of COVID-19 – both in and in neighboring countries – are causing the giant economy.

There is something to meditate on. China’s export growth unexpectedly slowed, data showed Monday, but inflation at the country’s huge factories was higher than expected, underlining pressure from rising raw material costs.

The headwinds on growth are already prompting calls for further reductions in reserve requirements and possibly even policy rates, both in China and its neighborhood. Thailand’s tourism-dependent currency is at its lowest in 2018, forcing the Bank of Thailand to become dovish as the Philippines could copy China’s advance on Thursday and reduce its own reserve requirements. * Slowdown in China’s exports in July could signal more bumps to come * China’s factory price growth in July accelerates, heightens general trade and economic pressures

4 / COVID CLAIMS

Have you tried getting COVID insurance and failed? Most of the major European insurers have removed pandemic coverage from their policies, setting them up for much stronger results than last year, when the virus caught them off guard.

The French AXA and the Italian Generali and the German Allianz have already recorded good figures and next week will see the turn of Zurich, the Dutch pair Aegon and NN and the British Aviva, M&G and Prudential.

And it’s not just COVID life insurance from business claims that will be of interest. Activist investor Cevian recently took a 5% stake in Aviva and Prudential is severing its US branch under pressure from another corporate raider, Third Point. * Activist Cevian takes stake in Aviva and seeks return on capital of 5 billion stg * Axa in France rebounds after pandemic as XL unit becomes profitable

5 / VOTES IN ZAMBIA

Zambia will head to the polls on Thursday in what appears to be a close election between incumbent President Edgar Lungu and serial challenger Hakainde Hichilema, known as HH.

Analysts say it will likely be decided by young people and first-time voters frustrated by an economy with the highest unemployment rate in 10 years and skyrocketing cost of living due to the currency collapse.

He is also in default. Debt restructuring was put on hold until after the election, but it is not a simple restructuring. It is supposed to be the first big test of the “common framework” debt relief plan put in place by the G20 countries last year. They need Zambia to be a success for other reluctant countries to follow suit, so whoever wins the election will be firmly in the spotlight. * Zambia Lungu faces stiff electoral competition as debt crisis escalates * Zambian President sends military to tackle pre-election violence * Zambia and IMF move towards bailout loan program

(Reporting by Marc Jones, Sujata Rao and Carolyn Cohn in LONDON, Ira Iosebashvili and Megan Davies in NEW YORK and Vidya Ranganathan in SINGAPORE; Editing by Giles Elgood and Andrew Cawthorne)

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